In Surprise Move, Federal Officials Cap High-Risk Pool Enrollment

February 15, 2013 -- Federal officials announced last week that they are blocking new patients from enrolling in the high-risk pools for people with medical conditions, citing cost concerns.

The suspension will take effect immediately in 23 states and District of Columbia, where the federal government runs the program, known as the Pre-Existing Condition Insurance Plan (PCIP). "All applications must be received by February 15 to be eligible for enrollment," said a two-page memo from the Center for Consumer Information and Insurance Oversight.

In other places, where individual states administer the programs, officials can decide to stop enrolling people immediately if they choose. Federal officials said that no applications from those states could be processed after March 2.

More than 135,000 enrolled in the plans after the program began in the summer of 2010—slightly more than one-third of the 375,000 people that early projections predicted. One reason why enrollment was lower than anticipated is that the federally authorized program requires people to be without insurance for six months. However, despite the relatively low enrollment, costs for the overall program were high because many of the patients had higher-than-anticipated medical bills.

The announcement came a day after the Center for Consumer Information and Insurance Oversight Director Gary Cohen told the Senate Finance Committee that the agency took other steps in January to keep the costs below the $5 billion that Congress provided. "We are doing everything we can to avoid running out of money," Cohen said.

In January, the federally run plans made several cost-saving changes. The memo asked administrators of the state-run programs to "determine the feasibility of changing your currently offered PCIP benefits to be consistent with" the lower federal benefits that were instituted in January.

The reductions in January included cutting the share of the medical bill that the plan pays after a patient pays a deductible. Starting in January, the federal program has paid 70 percent of charges and the patient must pick up 30 percent of costs after paying a $2,000 deductible. Previously, federal officials paid 80 percent of allowed charges with a 30 percent coinsurance for patients.

Federal officials also increased the maximum out-of-pocket limit from $4,000 to $6,250 in 2013 for in-network services and from $7,000 to $10,000 for out-of-network services. The program also consolidated three plan benefit options into one plan with a $2,000 deductible for in-network medical services and $500 deductible for formulary prescription drugs.

"CMS recognizes that several state-based PCIP programs currently offer coverage that may be more generous than the coverage now offered in the federal PCIP," said the memo. "State-based PCIPs may pay higher percentages of allowed charges, have lower deductibles, and lower maximum out-of-pocket limits than the federal PCIP. While CMS has allowed those variations in the past, CMS is evaluating the level of cost savings to be realized if state-based PCIPs were to adjust their benefit packages to match the benefits now offered in the federal" program.

People with preexisting conditions will be able to apply for health coverage through the new exchange marketplaces on Oct. 1.

"This program has successfully served more than 135,000 Americans and provided needed security to some of our nation's sickest people," said CMS spokesman Brian Cook. "We are suspending any new enrollment until further notice to ensure funding through the year for current enrollees, who will continue to receive the coverage they're depending on."

About nine million people in the United States have preexisting conditions that might qualify them for the high-risk pool program if they could meet other requirements.

Mission

The mission of The Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.